Rethinking Transparency – Inpatient Prospective Payment System Final Rule Rescinds Proposed Survey Disclosure Rule

The 2018 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) proposed rule, published in April 2017, contained a controversial provision that would have required accrediting organizations (AOs) that confer deemed status (such as The Joint Commission and DNV) to make all survey reports and acceptable plans of correction publicly available on their websites within 90 days of issuance (Proposed Transparency Rule). While the proposed rule cited the goal of improved transparency and enhancing patient health and safety, hospitals and other health care facilities that rely on AOs for deemed status voiced significant concerns about the unintended consequences of such disclosures, including providing an AO-slanted view of events, placing health care facilities on the defensive regarding corrective actions, the inability to correct misstatements in survey reports, and the risk that the public would not understand the survey process and become unreasonably biased against certain facilities. The Proposed Transparency Rule also garnered comment as Centers for Medicare and Medicaid Services (CMS) does not require itself to make all of its survey reports publicly available in such a short time frame, and does not presently make full plans of correction for all health care facilities readily available to the public.

To the surprise of some in the industry, the 2018 IPPS/LTCH PPS final rule (Final Rule) released on August 2, 2017, withdrew the Proposed Transparency Rule in its entirety, for a reason entirely unrelated to the main arguments that had been raised: potential conflict with Section 1865(b) of the Social Security Act (Act). Section 1865(b) of the Act provides that:

The Secretary may not disclose any accreditation survey (other than a survey with respect to a home health agency) made and released to the Secretary by the American Osteopathic Association or any other national accreditation body, of an entity accredited by such body, except that the Secretary may disclose such a survey and information related to such a survey to the extent such survey and information relate to an enforcement action taken by the Secretary. See 42 USC 1395bb.

CMS indicated in the Final Rule that it was concerned that implementing the Proposed Transparency Rule would “appear as if CMS was attempting to circumvent” the Act by requiring the AOs to release their own survey reports—a concern that was sufficient for the Proposed Transparency Rule to be withdrawn.

Whatever the basis of the decision, AOs, hospitals and health care facilities must prepare for the next effort to make AO and CMS survey and plan of correction information readily available on-line—transparency may have been delayed by the withdrawal of the Proposed Transparency Rule—but it is on the way, like it or not.

This post was written bySandra M. DiVarco  of McDermott Will & Emery.
More legal analysis available at the National Law Review.

EEOC Alleges Hospital’s Mandatory Flu Vaccine Policy Violates Title VII

Mandatory Flu VaccineAs summer temperatures soar, one might think the last thing to worry about is the upcoming flu season. And while that may be true in most respects, the flu is on the minds of the Equal Employment Opportunity Commission (EEOC). A lawsuit filed by the EEOC sheds light on the issue for healthcare employers who impose mandatory flu vaccine requirements on employees as a condition of continued employment.

The EEOC alleges in EEOC v. Mission Hospital, Inc. – a lawsuit that includes class allegations – that Mission Hospital violated Title VII by failing to accommodate employees’ religious beliefs and by terminating employees in connection with the hospital’s mandatory flu vaccination program. In particular, the EEOC took issue with the hospital’s alleged strict enforcement of its deadlines, which required employees to request an exemption by Sept. 1 and, if the exemption request was denied, to obtain the vaccination by Dec. 1.

According to Lynette Barnes, regional attorney for the EEOC’s Charlotte District Office, “An arbitrary deadline does not protect an employer from its obligation to provide a religious accommodation. An employer must consider, at the time it receives a request for a religious accommodation, whether the request can be granted without undue burden.”

The key takeaway here is that, similar to what is required under the Americans with Disabilities Act (when, for example, an employer is analyzing the application of a policy to a particular employee with a disability), employers should consider analyzing their duty to accommodate under Title VII based on the facts and circumstances of the particular case, as opposed to applying an (allegedly) inflexible rule without regard to the circumstances of the particular case. The other take-away here is that employers should consider basing this kind of employment decision on more than one reason – for example, a missed deadline plus a determination that granting the exemption would (or would not) be an undue burden (and why).

A copy of the EEOC’s lawsuit is found here and a copy of Mission Hospital’s answer is found here.

ARTICLE BY Norma W. Zeitler of Barnes & Thornburg LLP
© 2016 BARNES & THORNBURG LLP

Budget Deal Alters Reimbursement to Off-Campus Hospital-Owned Facilities

Prior to the Act, covered out-patient department (“OPD”) services included services provided by facilities meeting the complex hospital-based rules, even if the facility was not physically-located on the campus of the hospital. Subject to the grandfather provision discussed below, the Act adds a specific exclusion to the definition of covered OPD services, making services furnished by an off-campus outpatient department of a hospital ineligible. The Act provides that a facility is “off-campus” if it is not within 250 yards of the hospital’s main buildings (including for this purpose, a “remote location of a hospital,” meaning a separate in-patient campus of the hospital, which is a helpful clarification in an otherwise problematic law). Facilities deemed “off-campus” are ineligible for Medicare reimbursement at the hospital outpatient rate.

The inclusion of a grandfather provision will mitigate some of the Act’s impact, as facilities currently treated as “hospital-based” will not be impacted by the change in law. Only facilities that are not billing as “hospital-based” as of the date of enactment will be ineligible for reimbursement at the hospital outpatient rate. It is unclear whether a conveyance of an off-campus grandfathered facility would eliminate the grandfathered status and the ability of the buyer to bill for the services as “hospital-based.” The Congressional Budget Office (“CBO”) forecasts that the government will reap significant cost savings from the lower rates that will apply; an October 28, 2015 analysis from the CBO projects that the change in reimbursement policy will provide $9.3 billion in relief by 2025.

© 2015 Proskauer Rose LLP.

Hospital Antitrust Skirmish Over Economist

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Antitrust law is designed to help the Davids of the world maintain a level playing field with the Goliaths. That objective was realized when Boise, Idaho-based hospital operator St. Alphonsus Health System, Inc. (“St. Al’s”) sued rival St. Luke’s Health System, Ltd. (“St. Luke’s”), to block St. Luke’s acquisition of the Saltzer Medical Group (“Saltzer”), one of Idaho’s largest and oldest independent medical groups.

St. Al’s argued that St. Luke’s acquisition of Saltzer would give St. Luke’s such a dominant market share of the adult primary care market in Nampa, Idaho that it could raise prices and block referrals to St. Al’s by having Saltzer steer patients to St. Luke’s. St. Al’s fears certainly seemed well-founded: Saltzer accounted for 43% of the adult primary care physicians, and about 90% of the pediatric physicians in the Nampa market. Since St. Luke’s accounted for about 24% of the primary care physicians in Nampa, the combined entity would have about 67% of the adult primary care physicians in Nampa.

The Federal Trade Commission (FTC) and Idaho Attorney General (AG) launched their own investigations and ultimately joined St. Al’s lawsuit. Things didn’t go well initially for St. Al’s as the judge refused to preliminarily enjoin the acquisition, concluding that St. Al’s was unlikely to suffer irreparable harm before a trial could be held in the case. St. Luke’s proceeded to complete the transaction.

However, in January 2014, after a bench trial, the judge concluded that the deal would have anti-competitive effects in terms of raising health care costs due to the increased negotiating leverage of the combined entity. The judge directed St. Luke’s to unwind the transaction, and divest itself of Saltzer’s assets. St. Luke’s has appealed to the Ninth Circuit. At oral argument, St. Luke’s contended that the trial court had failed to adequately consider the deal’s benefits.

Along the way, the trial court had an opportunity to decide a motion by the FTC and Idaho AG to exclude the testimony of St. Luke’s economist, Dr. Alain Enthoven, concerning the quality-related benefits of the acquisition. Saint Alphonsus Med. Ctr. – Nampa, Inc. v. St. Luke’s Health Sys., Ltd., No. 1:12-CV-00560-BLW, 2013 WL 5637743 (D. Idaho Oct. 15, 2013). A major thrust of the objection was that Dr. Enthoven had not read any of St. Luke’s physician service agreements (“PSA’s”), and therefore could not credibly testify as to “whether the acquisition creates the requisite integration to achieve the purportedly greatest benefits of integrated patient care.”

The Court denied the motion. After reviewing the facts shared in the decision, the argument seems like a stretch and we feel the Court reached the right result. As the Court observed, despite not having read the PSA’s, Dr. Enthoven interviewed six top executives from St. Luke’s and Saltzer, and reviewed thirty depositions. The Court believed this effort enabled Dr. Enthoven to testify credibly concerning the quality-enhancing benefits of moving away from the fee-for-service model of compensation and toward the quality-based model of compensation.

The judge also rejected the FTC’s contention that Dr. Enthoven was unqualified to testify regarding how the use of health information technology, such as electronic medical records, promotes higher quality care in light of Dr. Enthoven’s admission at his deposition that he was not a “healthcare IT expert.” Observing that Dr. Enthoven was testifying as an economist, not a programmer, the judge ruled that Dr. Enthoven was qualified to explain how various healthcare IT tools promoted higher  quality care even if he didn’t understand the mechanics of how those tools worked. This conclusion also seems correct, and not really a close call at all.

Do you agree with our conclusion that the Court made the right call in denying the motion to exclude Dr. Enthoven’s expert testimony?

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Federal Trade Commission (FTC) Wins Appeal: ProMedica Merger with St. Luke’s Not Allowed

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On April 22, 2014, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) upheld the Federal Trade Commission’s (FTC) finding that the merger between Ohio-basedProMedica Health System, Inc. (ProMedica) and St. Luke’s Hospital (St. Luke’s), an independent community hospital that operates in the one of the same counties as ProMedica, would adversely affect competition in violation of federal antitrust law. Prior to the merger, ProMedica and St. Luke’s comprised two of the four hospital systems in Lucas County, Ohio. After the two systems merged, ProMedica held more than 50% of the applicable market share.

Accordingly, in 2011 the FTC ordered ProMedica to divest itself of St. Luke’s. ProMedica appealed the FTC’s order to the Sixth Circuit. In a unanimous opinion, the Sixth Circuit denied ProMedica’s petition to overturn the FTC order, citing concerns about anti-competitive behavior and the ability of ProMedica to unduly influence reimbursement rates with healthcare insurance companies.

The full 22-page court opinion may be accessed here.

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